As we think about the breadth of our experiences in the industry, we realise that we have (unconsciously) left some space in our content strategy so far to talk about some of our most recent experiences of working in credit management and what it is like working in the in the industry in 2022, and what it is bound to be like in the future too. So, we thought that called for a discussion on e-billing.
So, let’s start with the most basic question, what is even e-billing? For any of our readers that tend to operate on the outskirts of our industry or have an indirect involvement in some incapacity, e-billing is essentially a relatively new, technology driven way of sending your invoices to your client. Think of it as one step further from the progression that happened when companies started asking for invoices to be emailed, rather than posted.
Next question: how does it work? Well, the e-billing system maybe owned independently of the client and the service provider. In which case it would be licensed out to the client for them to use or it may be the proprietary asset of the client who have built their own e-billing system. In either case it is the client (the purchaser) who controls the system and gives permission to the seller to use it on their behalf.
Once a seller / service provider has been given permission to use it by having an account set up for them by the client, the idea is that the service provider is then supposed to “upload” their invoices on to the e-billing system in accordance with the billing protocol which has been agreed to in advance by both parties. This could be weekly, monthly, fortnightly, it just depends on what was agreed when negotiating on its implementation.
The theory (not to suggest that it is only a theory), is that the e-billing system is supposed to be mutually beneficial to both parties for the following reasons:
Faster payments to the supplier
Better forecasting for budgeting purposes for the purchaser
Easier reporting capabilities
Quicker processing times for both the buyer and the seller using features like bulk upload and bulk approve
Better visibility on the dispute journey of queried invoices
Financially advantageous to the seller as they greater efficiency results in more invoices being paid on time
Financially advantageous to the buyer as more processes are automated so cost savings can be had; and more…
It sounds like a dream come true really when you read the far from exhaustive list of touted benefits above but before you all go Googling the cheapest e-billing system to buy, please allow us to temper some of that excitement with a bit of critical evaluation. Whilst you would hardly meet a group of people who are more embracing of technological advancements in the industry than us, our experience has enabled us to make the following observations.
The fact that these systems are often owned independently of the companies that are using them means that there are sometimes issues with making the system fit for purpose. There are some extremely large companies out there who have invested significant sums of money in their e-billing products and for them to get a return on that investment they need to be selling it to quite a few people. The problem is all of them people tend to require slightly different things.
Granted, many of the biggest players in the e-billing world have latched on to the idea that this problem could be minimised by orientating their build around a specific industry. The assumption there being that from company to company the differences in their requirements will boil down to minor tweaks rather than wholesale, or sometimes impossible changes, but the problem is not eradicated completely.
The next problem is there often appears to be a fairly seismic underestimation on the part of both the buyers and the sellers of the level of investment involved in the proper implementation of a system that is designed to lighten the load of huge monthly billing runs and the effects of this can cause sometimes serious delays to payment. For example, insufficient training provisions for all approvers of invoices who will be required to use the system is a common mistake.
The problems mentioned above seem to take on even more importance if they are built in-house, for use in-house, as this is often done on a much smaller budget which makes accommodating all the sellers’ requirements even more difficult. Spare a moment for all the different kinds of companies that your company buys from and imagine trying to accommodate all their different billing methods in a system, that’s before any changes that might happen from time to time.
The other major downside is investing in an e-billing system from one of the most well-known providers is not going to be cheap. We have seen some companies assume this means they can save costs elsewhere by reducing the size of the team that processes invoices which can create problems further down the line when individual invoices require a manual override by a human. It can get overwhelming quickly, particular during early implementation stage.
But surely its not all doom and gloom, is it? Absolutely not. For what it is worth, our opinion is this is the future. We have had a quick glance back through history and we think that this is definitely the general direction we are heading in now and in the future and eventually most, if not all of the PTP process will be automated. We are absolutely advocates and when it works well, it really does feel good, but we will repeat what we said before, everyone needs to be onboard when the plunge is taken into e-billing.
We are also self-confessed data maniacs and one of the biggest strengths to an e-billing system is the reporting capabilities. We have worked with some truly archaic reporting systems over the years of which the user interface would not look out of place in a 60’s sci-fi movie, but with e-billing systems they are built with the importance of reporting in mind. Yes, it does mean the raw data has to be right to begin with but when it is, the power in that can be phenomenal.
So, is it worth it? Probably more so for the buyer than the seller in our view. Although the seller usually has less of a say over whether they must work with it or not. Even so, it is not for everyone. Not right now anyway. E-billing systems work best for companies that have high volume billing to do and process each month and have enough resources to invest in terms of finances, and people to ensure that it is implemented and maintained sufficiently in order to reap the most rewards possible from it. After that, the potential is truly huge.
There is a great deal more to be considered when it comes to great credit management, but we hope we have given you a brief insight into some of the important and contemporary factors that need to be considered. If you are interested in knowing more or wish to have a chat about a particular area of uncertainty, then get in touch for a free no-obligation discussion at www.jspcreditmanagement.co.uk or contact us on 01827 66820 to discuss your needs.